GLOSSARY FOR HARMONIZED SYSTEM

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GLOSSARY
Ad valorem rate of duty
A rate of duty expressed as a percentage applied to the appraised customs value
of the imported good.
Antidumping investigation (AD)
An investigation by the Commission under Title VII, sections 701-783 of the Tariff
Act of 1930, as amended, to determine if a domestic industry is injured by unfairly
priced imports (those sold at less than fair market value or their costs of
production).
Antidumping duty
An additional charge assessed on imports from countries that have been
determined by the Commission to injure the U.S. industry as a result of unfairly
priced imports; these duties are not shown in the HTS.
Bill reports
Column 1 rate of duty Ð Rate that applies to normal trade relations countries, as
declared in statutes or in Presidential proclamations; it is shown in the HTS in the
column labeled "General" and occasionally referred to as the "most favored nation"
rate. To be eligible for a column 1-special duty rate, a country must be accorded
column 1-general duty treatment. Some countries eligible for these rates under
international agreements may be totally or partially embargoed; no embargo
imposed under U.S. law is shown in the HTS.
Column 2 rate of duty
Rate that applies to countries without normal trade relations status with the United
States; current list is in general note 3(b) to the HTS. The two currently listed
countries are embargoed.
Compound rate of duty
A rate of duty with both ad valorem and specific components.
Countervailing duty investigation
An investigation by the Commission under Title VII, Sections 701-783 of the Tariff
Act of 1930, as amended, to determine if a domestic industry is injured by goods
receiving benefits from a foreign government's subsidy programs.
Countervailing duty (CVD)
An additional charge assessed on imports from countries that have been

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determined to injure the U.S. industry by receiving benefits from a foreign
government's subsidy programs (whether by direct cash outlays or other means
not afforded to goods not produced in the pertinent country); these duties are not
shown in the HTS.
Customs Ruling Online Search System (CROSS)
A database maintained by Customs and Border Protection that contains published
rulings on tariff classification, origin/marking, valuation or other matters. Not all
products are included in the database (only those for which rulings have been
published, usually following importer requests) but it can be searched by product
name or HTS number.
Customs Territory
The territory in which the customs laws of a nation state apply in full. For the United
States, HTS general note 1 says that the customs territory includes only the 50
States, the District of Columbia and Puerto Rico.
Essential Character
A principle of tariff classification used under the Harmonized System to distinguish
one or more significant features, materials, functions or other characteristics that
determine a good's identity or nature. When applied to certain mixtures or
composite goods, this principle says such goods may be classified as if they
consisted of the component or material that is predominant by weight, value,
quantity or an other important aspect or that plays a major role in relation to the
use of the goods.
Free trade agreement (FTA)
An agreement between two (bilateral FTA) or more than two (regional FTA) that
reduces or removes duties on eligible items traded between the countries and that
contains various other legal commitments aimed at facilitating such trade
General Notes (GNs) and General Rules of Interpretation (GRIs)
 General Rules of Interpretation (GRIs) - The six international rules designed
to help you understand and properly apply the Harmonized System
categories, an outline of the method used to determine product
classification, and the additional U.S. rules of interpretation applicable to 8-
digit U.S. subheadings.

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 General Notes (GNs) - The U.S. provisions for applying the HTS, including
an explanation of the rates of duty, the countries to which they pertain, and
rules that must be met to obtain particular tariff treatment.
Harmonized System (HS)
An international product nomenclature system by over 100 countries for classifying
traded goods, established in a convention maintained by the World Customs
Organization; its full name is the Harmonized Commodity Description and Coding
System.
Harmonized Tariff Schedule of the United States (HTS or HTSUS)
The HTS is the statute used to determine tariff classifications for goods imported
into the United States and maintained and published by the USITC. The HTS is
based on the international Harmonized System. Nearly all countries base their tariff
schedules on the Harmonized System, making it easier to conduct international
trade and compare trade data.
Heading
The broadest category of tariff provisions in the HS/HTS, designated by a 4-digit
number and with a product description that is not indented.
Legislative reports
Reports prepared by the Office of Industries and TATA that provide information to
Congress and to the public about bills that would temporarily reduce or remove the
duty on a specific good, make permanent tariff changes in the HTS, or set up or
modify tariff programs (such as the GSP).
Nomenclature
A structured system of numbered descriptive categories governed by rules and
used for classifying imported goods for statistical and duty determination purposes.
The intent of such a system is that each good be described in only 1 category.
Regional value content
The value added to a product in, or attributable to materials or components
produced in, the countries that are members of a free trade agreement. The
method of calculation of this value is specific to each free trade agreement and
may vary by sector.

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Rules of origin
Rules of origin are legal principles that determine the source of a good, particularly
one that does not come entirely from 1 country, in terms of the derivation of the
materials or components or the location of the processes used to make it. These
rules determine how the article is reported for trade data purposes and which rate
of duty is imposed, and may determine whether it is subject to embargoes,
antidumping or countervailing duties or other measures. For example, the NAFTA
rules of origin would prevent an item made in China and shipped through Mexico to
the United States from receiving duty-free treatment, unless the item undergoes a
qualifying transformation while in Mexico.
Schedule B
Schedule B is the Statistical Classification of Domestic and Foreign Commodities
Exported from the United States, as maintained and published by the Bureau of the
Census. It is based on the HS but contains additional 10-digit subdivisions to
gather export data of particular U.S. interest.
Schedule of Concessions
A set of tariff commitments given by a particular country that is attached to a trade
agreement to reflect the outcome of negotiations between 2 or more countries,
usually including a base rate and staging code for tariff categories for which
concessions are given (see Staged Rates, below).
Specific duty
A rate of duty expressed as a specific currency amount charged per unit of the
imported good (such as "¢/kg" or "¢/doz.").
Staged Rates
Gradual reduction in base duty rates over a period of years, usually over 5, 10 or
some higher agreed number (known as the transition period), designed to allow
adjustment by domestic producers to additional imports encouraged by lower duty
rates and set forth in a schedule of concessions. The last stage is known as the
"final rate" for trade agreement purposes. Staged rates are usually negotiated but
occasionally are used in statutes. In the United States, tables with staged rates are
usually proclaimed by the President.
Statistical reporting number
A 10-digit administrative product category intended to provide more detailed data
on imports or exports.
Subheading
A six-digit HS provision or eight-digit HTS rate line, subordinate to an HS heading,
with article descriptions that are indented.

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Substantial transformation
The fundamental change (normally as a result of processing or manufacturing in
the country claiming origin) in form, appearance, nature, or character that an item
undergoes, which adds to its value an amount or percentage that is significant in
comparison to the value which the item (or its components or materials) had when
exported from the country in which it was first made or grown.
Tariff
See duty.
Tariff rate line
An 8-digit legal tariff provision in the HTS.
Tariff-rate quota (TRQ)
A tariff-rate quota combines a quantity limit and a tariff on specified products, often
agricultural goods. Imports entering during a specific time period at levels below
the agreed quantity (known as the "trigger level") are usually subject to a lower, or
sometimes a free, duty rate. Imports above the quantitative threshold face a higher
duty but are allowed entry, unlike absolute quotas.
Trade remedy investigations
Includes antidumping and countervailing duty investigations and sunset reviews
provided for under Title VII of the Trade Act of 1930, and global safeguard (section
201) and market disruption (section 421) investigations provided for under the
Trade Act of 1974.
World Customs Organization (WCO)
Intergovernmental organization exclusively focused on customs simplification and
harmonization, valuation, origin, and training that maintains the Harmonized
System, among other functions.
Wholly originating
For rules of origin, a term used to describe goods wholly manufactured or obtained
from a designated country or group of countries. No foreign materials or inputs are
used in the manufacture of such goods, and all processing is performed in the
designated country.